WASHINGTON — If Congress finally agrees to increase taxes as part of a debt-reduction plan, the deal may raise hundreds of billions of dollars for the government without raising your tax rate.

How’s that? By limiting everyone’s favorite tax shelters, including perhaps the deductions for mortgage interest, charitable giving, local property taxes, and other tax breaks that reduce what people pay to Uncle Sam.

For many upper-income taxpayers, that would amount to a tax increase. But it suddenly looks appealing to some Republicans, who have viscerally opposed almost every kind of tax increase in recent years.

Some conservative lawmakers say scaling back tax deductions would avoid the collateral damage incurred by raising tax rates. As a political decision, it would allow GOP lawmakers to say they narrowed “tax loopholes” while maintaining the lower Bush-era tax rates for all taxpayers.

But many economists insist the differences between curbing tax breaks and raising rates are overblown. Both amount to tax increases for people subject to the policy. Both have the potential to discourage work, because one’s after-tax income, or purchasing power, is reduced.

“If you’re raising the same amount of money from the same income groups, you are going to be creating roughly the same work disincentives,” said Alan Viard, a resident scholar at the conservative American Enterprise Institute and a former senior economist at the Federal Reserve Bank of Dallas. “A lot of people misunderstand what the difference is, and they think the difference is bigger than it is.”

The value of the mortgage interest deduction, one of the most widely used tax breaks, would almost certainly be trimmed by putting a ceiling on deductions. A cap would thus make housing debt more expensive.

“If you’ve just made some of the things that I spend money on more expensive, it’s as if you raised my marginal tax rate,” said Alan Auerbach, an economics professor at the University of California at Berkeley and director of its Burch Center for tax policy and public finance.

Targeting deductions

The idea of targeting tax deductions gained some acceptance over the past two years as several special commissions included it in debt-reduction plans. GOP presidential candidate Mitt Romney also proposed a cap on tax deductions, although he intended it to pay for lower tax rates.

Many economists say Congress should curb or eliminate special deductions and tax credits for one important reason — they distort personal and corporate investment decisions. Households would be likely to invest less money in owner-occupied housing and more in other types of businesses if the tax code didn’t subsidize mortgage debt.

But that isn’t how lawmakers are promoting the plan. With the current Bush-era rates due to expire at the end of the year, lawmakers are looking for ways to raise revenues without an across-the-board tax hike. (The tax increases are part of the so-called fiscal cliff, along with automatic spending reductions.)

President Barack Obama and many congressional Democrats don’t share the enthusiasm for capping tax breaks and insist revenue must come from raising tax rates on high earners to the levels of the 1990s. Republicans refuse to raise tax rates, but say tax deductions are a compromise that some of them could swallow.

“It’s additional revenue and represents a concession,” said Sen. John Cornyn, R-Texas, who said he supports a cap on deductions if Democrats agree to reduce spending. “Part of the puzzle is going to have to be revenue, but hopefully in a way that doesn’t kill jobs and harm economic growth.”

Sen. Lindsey Graham, R-S.C., has been one of the most outspoken supporters of capping tax deductions, even though doing so would violate a pledge to the anti-tax group Americans for Tax Reform. Graham and other Republicans said they would support such a plan if Democrats agree to reform entitlement programs.

“There will be a large majority of us, I think, saying we can generate revenue by capping deductions, but in return we want entitlement reform along with spending controls,” Graham said.

Paying down debt

Limiting deductions could generate a lot of money to help pay down the country’s $16.3 trillion debt.

Capping the value of all tax deductions at $50,000 would raise $750 billion over the next decade. That cap would mostly affect households earning more than $112,000, because most taxpayers don’t write off that much from their taxes.

A $50,000 cap would result in the largest tax increase — about $78,280 — for people who earn more than $1 million in income, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution. Those taxpayers benefit the most from tax breaks because they borrow more money for their homes, donate more money to charity, and pay more in property taxes.

Lowering the cap to $25,000 would raise more money for deficit reduction — $1.2 trillion — but would affect some middle-income taxpayers who benefit from a lot of tax breaks. That is one reason Democrats don’t support curbing tax breaks as an alternative to raising tax rates.

“You’ve got to include increases in rate as well as changes to the code,” said Sen. Dick Durbin, D-Ill. “Otherwise you just can’t reach the number without hitting the middle class.”

Obama is seeking his $1.6 trillion in new revenue from upper-income people and businesses. His proposal includes raising tax rates on the wealthy and imposing a cap on the value of their tax deductions.

According to the Congressional Budget Office, raising the top two tax rates to 36 and 39.6 percent would raise $950 billion over 10 years for deficit reduction. The impact on the economy would be minimal, reducing GDP by 0.1 percentage points in 2013, according to the CBO.

“We have not seen a realistic proposal that would cap tax [breaks] and raise sufficient revenue, which is why raising the top tax rates back to where they were during the Clinton years is so important for addressing our fiscal imbalances,” said Alan B. Krueger, chairman of the White House Council of Economic Advisers.